Here’s why inflation may look like it’s easing but is still a huge problem

It still takes 1 year to get the rates down to neutral rate. They won’t cut more than 50 basis points and it is actually very, very restrictive currently. So even another 100 bps cut over the next 2 meetings is above neutral rate. So it will take time and so the CPI can and will improve over time too. Regardless there are some voices warning before inflation. It came down a lot and it will go down further too in the next 12 months. Second there is another problem which is in focus, the elevated job market problem. The unemployment is on the rise and so the FED is forced to come down to a neutral rate faster than doing just 25 basis points steps only as it takes too much time. There is also the additional risk that the soft landing can be hurtened. So the only question is how fast the FED will cut rates. I would strongly prefer another 50 basis points rate cut on the next meeting now. It makes the most sense to me.